I decided rates aren’t likely to come down next year (that’s just my guess but I'm acting on it), so I'm working on refinancing a bunch of my buildings.

 

So, as part of the pre-qualification process, the bank needs a PFS (a “Personal Financial Statement,” i.e. a form you must complete showing all your assets).

 

No matter how often I’ve filled one out, it’s a grind. Let’s face it - in a capitalist society, money is points, and seeing your dollars up on the scoreboard can be confronting. 

 

There’s one funny part that always gets me. Under assets, after listing your checking and savings balances, retirement accounts, etc., there is a section labeled “Furniture and Personal Property” and “Automobiles.” 

 

They’re including your crap in your net worth, which is really nice of them, but also completely daffy.

 

Bank: “Well, we weren’t going to lend you a million dollars, but we changed our minds after seeing how you splurged last year on that RH cloud couch.”

 

Because, really, am I going to sell my stuff to make my mortgage payment?

 

And what’s all my furniture really worth? After furnishing and unfurnishing a half-dozen Airbnbs, let me tell you - used furniture is worthless. 

 

And why should cars be part of my net worth? I can’t sell them; they’re leased, and the one trashed family minivan we own is probably worth less than one rack of Lori’s shoes.

 

But more importantly, the value of my stuff is going down. To get rich, you have to own stuff that goes up, that stuff being “assets.”

 

Assets are things that make you money, are appreciating in value, or both. Houses, apartment buildings, businesses, gold, or stocks. Art if you are an art insider. 

 

Home sales are at the lowest level since 1995, and those who manage to buy don’t look like homebuyers at any time in the past:

So “more American parents are stuck renting. Unable to lock in their housing costs with a 30-year, fixed-rate mortgage, they are exposed to future rent inflation.”

 

Future rent inflation. Ouch.

 

So how do you get into the bottom of the housing ladder, a bottom that keeps rising?

 

I’m constantly pushing alternatives to the traditional Single Family Residence - buying and living in a 2-4 unit building is the obvious move - less competition, easier to qualify, and a subsidized housing payment.

 

In fact, I’ve never lived on a property without tenants until literally one month ago, when our back tenants moved out, and we finally called uncle after 25+ years of having tenants subsidize my housing payment.

 

“But we don’t want tenants,” we hear constantly. So instead we see buyers waiting and waiting for the crash in interest rates or prices that are never coming.

 

The housing market is incredibly supply-constrained, which will never change in our lifetimes. There are no housing reformers on our City Council and zero pending bills at the state or federal level that will significantly unleash building. 

 

It’s a cliche that Realtors always say it’s a good time to buy.

 

Well, it’s not a good time to buy! It’s never been harder. It was easier ten years ago, five years ago, and twenty years ago, and yes, we all should have bought then.

 

But it won’t get any easier than it is today.

 

 

Until next Friday,